Socio-Economic Determinants of National Saving in Pakistan

Savings have energetic role in growth of an economy. A vigorous saving rate is very significant component, which is part of all major economies of the world. The socio-economic determinants of saving in Pakistan were determined in present study. It used time span of 1973–2018 in case of Pakistan. We applied Autoregressive Distributive Lag Approach (ARDL) for long run co-integration and Error Correction Model (ECM) for short run empirical estimation. Two models were used to estimate economic and social impact on National Saving in Pakistan. The empirical results indicated that the Gross Domestic Product, Government’s Current Expenditure, Fiscal Deficit, Worker’s Remittances, Unemployment rate and Inflation rate determined the saving rate in Pakistan. Whereas Demographic variable Age Dependency Ratio, Government Size, Urban Population, Rural Population found responsible social variable which determined saving in Pakistan. As per empirical results, it is found that the GDP,, government current expenditure, interest rate, workers remittance, fiscal deficit, inflation rate, and unemployment rate have both short and long run effect on national savings. It is suggested that fiscal and monetary tools should be used efficiently to handle the economic factors positively as improvement in GDP, reduction in inflation rate and unemployment rate that heavily influenced national saving rate in Pakistan.